Chapter · Master Robinhood

Interest and Robinhood Gold

Beyond order flow, Robinhood earns a lot from net interest. It holds customer cash and lends money to traders on margin, and it keeps interest on both. It also sells Robinhood Gold, a paid monthly subscription that adds perks like a higher rate on uninvested cash, bigger instant deposits, research reports, and access to margin borrowing. Gold is optional. The lesson here is that interest income and subscriptions can matter more to a broker than the trades themselves.

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What you get asked

What is net interest income for a broker like Robinhood?
Net interest is the spread a broker keeps from holding cash and lending on margin. When interest rates are higher, this source can become very large.
Robinhood ___ is a paid monthly subscription that unlocks extra perks.
Robinhood Gold is the paid tier. It adds features like a higher cash rate and margin access, but it is optional and only worth it if you use those perks.
Match each Gold perk to what it does
Gold bundles several extras. Some are handy, but margin access in particular carries real risk, which we cover soon.
When you leave uninvested cash in a broker account, who usually earns interest on it?
Idle cash is not idle for the broker. It can earn interest on that cash, and programs like Gold share part of it with you. This is why parking large cash sums deserves a second thought.

The rest of this chapter

Learn how Robinhood works, how it makes money, and how to trade with discipline instead of hype.